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Conversations on what’s next

So this is more of a snapshot in what I feel may be one of the major thought (and indeed praxis) trends in my future. For the blog I've labeled it 'augmenting capitalism', which is a term I've heard and liked, in that it emphasizes that there is something worth saving. But it's not just augmenting, it's also cutting back. So another way to put it would be 'capitalism without the capitalist'. Namely that mythical figure who does nothing for an enterprise except supply money, and in our current system is the most handsomely rewarded. I still want enterprise, I still want a market economy, I just want to make the whole process more efficient. I want 'open source for the world', where improvements to the product don't have to always flow through an artificial barrier that takes a tax and gives it to the person who put up that barrier. I want us cooperating (and competing) to make this world go round.

I had two conversations recently on this topic of 'what comes next', both which helped frame some of my thoughts, and indeed give me more hope. The first was with my friend Dave, who has investigated setting up legal foundations to help the causes he cares about. He recently graduated from law school, and he's actually in love with corporate law. Why? Because in his words 'it's the best law money can buy'. Indeed corporate entities have influenced law makers for awhile now, creating an air-tight system that is built to protect the corporation. Constitutional law is fraught full of holes and interpretations, whereas corporate law is crystal clear, so as to protect the money. The great thing, however, is that anyone can set up a corporation, use it for other purposes, and enjoy all the protections that the law affords. Corporate law was built so that if money was at stake, the corporation loses the money, but individual stakeholders don't lose their houses. He talked about the idea of setting up shell corporations, and going after interesting actions, and in retaliation just the shell corporation can get sued – no one else is liable. We further riffed on the idea of non-profits that make money, and corporations owned by foundations. If we look hard, we can start to see the rise of a new forms of organization. One of the best examples is the Mozilla corporation, which is entirely owned by the Mozilla foundation. They are legally allowed to make money and turn a profit, but by definition it all has to go 'to good', since the foundation is the only shareholder, and the foundation has a mission to promote standards on the web. If something they own happens to make money, well, that money just has to go to furthering the mission. Dave also brought up the ACLU, which has a similar foundation/corporation split. Their lawyers bill $400 an hour, which is pretty standard rate for a good lawyer, which they are. So they actually make money for the ACLU, but it just gets reinvested back in to fighting harder for civil liberties. I imagine there are other similar types organizations emerging as well, a new sort of breed of non-profit.
The thing we need to do is create a meme that represents this new form of organization. It's a hybrid, it's not a traditional non-profit, in that it doesn't just beg for money from rich donors year after year to complete it's mission. And it's not a traditional business, in that it has some unalterable mission to do good written in to its core. And I'm talking something more positive than Google's 'Don't Be Evil'. I applaud the founders for attempting to write it in to their DNA, but I fear that as a publicly traded company it is too easy to hijack at some point (there's many more thoughts about Google in particular, but I'll hold off for now), that it's not bullet proof in the way a non-profit or a corporation owned by a foundation is.

To create the meme we need a good name for this new hybrid type of organization. The best we came up with was a 'non-corporation'. It's not the profit we don't want, in fact we seek profit, but only to reinvest in further missions to do good. It's just the corporate environment and structure that we abhor, and it's tendency to become a cancerous beast looking to sustain itself on ever more growth and profit. It's a word with enough negative connotations, so it works well. The only problem I have is that it still begs the question, 'well, what are you?'. It's negative in its essence, instead of expressing a positive, which I prefer. But I've got nothing better yet.

The second conversation I had was with my friend Jared, which was interesting because we ended up talking towards the same place. What was most interesting about this to me is that Jared is far from any kind of radical. He's in the Venture Capital industry, he's just wrapped up helping grow a startup, and he's figuring out what to do next. He has lots of offers to become an 'entrepreneur in residence' at a number of VC firms, but he's looking to do something bigger. He wants to get those with money cooperating more with those with ideas in an environment more like the way hollywood works. You find backing and gather a team of people to implement a vision. The way the venture industry currently works is geared towards throwing money at companies often too fast, in the hopes that one of them will blow up. If 1 out of 10 companies funded is a big success, then the VC wins. But the problem is that the other 9 companies suffer. They are often forced to try to grow faster than is necessary or even advisable. I worked for Jared at a company that went through that exactly, where it was a very solid idea, and they had a very bright young team. But instead of letting the young guys learn on their own terms on a smaller scale, the VC's brought aboard a 'senior management' team. Though they had more experience in general, they certainly didn't in the domain, and all they really understood better than the founders was how to take orders from the people who gave them money. The VC's insisted that they grow super fast, extend and over-extend themselves, and that when they ran out of money they'd be sure to get another round of funding. They did exactly what the VC's told them, but at the end of the road there was no additional funding. If the company had been allowed to grow a bit more slowly, building up revenue before spending on credit, then I'm quite sure that it would have been a success.

The takeaway for me is that we both want to change how money works. We want to increase innovation, and to have money more easily flow in to good ideas and things that help the world, instead of pooling around waste and cruft. From very different lenses we see that there must be a better way than the current way. Indeed when we realized we were talking at the same thing, it surprised us that there aren't more people talking about it, since it seems so obvious. Capital is no longer flowing as efficiently as it could, because it gets wrapped up in these corporate structures that are too simplified to distribute it properly. For any single corporate structure it may make sense to pay congress to extend the copyright regime, to put forth a monopoly, to cause cancer to workers. But the system that results is flawed, it's not the 'end of history' and a natural result of the market. Instead it feels more like a temporary wrong turn, that we need to correct in to a more just _and_ more efficient system to build the future. Or at least I hope we can work together to make it temporary, and not a falling off of the edge.

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2 thoughts on “Conversations on what’s next”

“it’s tendency to become a cancerous beast looking to sustain itself on ever more growth and profit … Capital is no longer flowing as efficiently as it could, because it gets wrapped up in these corporate structures that are too simplified to distribute it properly”

It seems to me that some sort of coop approach could bridge the gap. First, coops are for-profit. Second, by their very nature, coops are wealth redistributing entities that ensure money is not as focused as it is now in the hands of a few and therefore capital could flow more easily. Finding ways to harnessing the power of the many small [capital-producing] entities that form the work force is key to finding a solution to our dysfunctional system.

I’m currently finishing the latest John Saul book (The Collapse of Globalism: And the Reinvention of the World). Nice thoughts there to
ponder.